On March 31, Western Australian treasurer Troy Buswell announced a cap on wage rises for public sector workers.
Future wage rises for the public sector would be pegged to inflation, Buswell said. Inflation is now running at 2.5%.
Any wage rises above inflation would be linked to improved efficiency and other workplace reforms. The announcement is part of the Coalition's push to cut the state government budget. Revenue has fallen as a result of the end of the mining boom.
Almost immediately after his announcement, Buswell made it clear that the WA police, who are now in negotiations for a new collective agreement, would not be included in the new wage limit.
Attack on wages
Since December, the WA government has been pushing an efficiency drive to save 3% across the public sector.
Buswell said pegging public sector wages to inflation would save the government up to $500 million.
This is based on a comparison with the most recent Public Service General Agreement. The Civil Service Association recently won a collective agreement for public sector workers which includes a wage rise of 15.5% over three years.
The WA treasury, meanwhile, says inflation will rise by about 9% over the same period.
Such a comparison is wrong, however. It assumes there will always be low inflation. Over the past decade, WA has had much higher inflation, driven by the mining boom. In the year to September 2005, WA's inflation rate rose to 4.9%, for example.
As the government is driving to cut spending, and while inflation is relatively low, Buswell finds it convenient to argue for a link between wages and inflation. It is likely, however, that if inflation rises in the future the government will push to move away from this policy.
Impact on workers
In the past, some unions have campaigned to have wage rises tied to inflation. Such an "escalator clause" can be an effective way to cut the extent to which workers' wages are eroded by price rises, especially during times of high inflation.
However, the WA government's proposal means workers will face a hard choice. Either have wages stand still or even fall in real terms, or give up working conditions and accept heavier workloads in exchange for higher wages.
Workers are likely to see pay fall for two reasons.
First, measuring inflation is a hotly contested issue. The Consumer Price Index (CPI), for example, has been criticised because it does not take mortgage interest costs into account. The actual cost of living can rise more than the government's favoured inflation statistics indicate.
Second, if pay is linked directly to inflation, worker's incomes may also suffer as a result of the time-lag between the period of inflation and when wages rise.
Only workers who win wage claims above inflation are guaranteed to truly maintain real-wage levels.
Importantly, the policy ignores what is happening on the income side for the government — which is clearly not linked directly to inflation. It also ignores the role workers play in generating increased income.
Public sector workers not only have the right to see their living conditions improve, just like all other workers. If the public sector is to be able to attract and keep staff then it needs to pay competitive wages.
Already significant sections of the public sector, especially education and nursing, are struggling to maintain staffing levels. A big factor has been the failure of these professions to maintain wage parity with other sectors, and an overall decline in government funding.
Police exempt
Although the government is looking to restrict the wages of the vast majority of public sector workers, it is not going to do this to the police.
This fits a pattern of police getting far better wages and conditions. This is not because the police are stronger or more organised than other public sector workers.
WA's nurses and teachers unions have run far more extensive and intense industrial campaigns in recent years than the police, but have not achieved the same outcomes.
The superior work conditions of police reflect the role of the police in capitalist society. The police are one of the main repressive arms of the modern capitalist state. In the end, police are needed to protect the interests of the capitalist class.
However, individual police officers do not have the same immediate interests as capitalists. For the police to be a reliable body it is essential they are able to identify closely with the system they protect.
One way this is achieved is by giving them relatively better conditions than other public sector workers. It's unsurprising, therefore, that the WA government is prepared to adopt a more conciliatory attitude to police wage demands.
Way forward
Immediate responses to the government's new wage policy have come from the Australian Nurses Federation (ANF) and the Liquor Hospitality and Miscellaneous Workers Union (LHMU). Other unions representing the state's public sector workers have recently won new agreements.
The ANF is negotiating a review of the final year of its three-year agreement, which expires in mid 2010. It aims to reduce the pay gap between WA's nurses and nurses in the rest of the country. The ANF is threatening a public campaign in support a greater-than-CPI wage increase.
The LHMU's collective agreement for teacher assistants expires at the end of 2009. LHMU state secretary Dave Kelly told the West Australian on April 1: "We took industrial action to get the last [agreement] in education so we don't rule out that at all. They can underestimate our members if they like but we'll put on a decent campaign."